Plants properties that control their water relations and water stress response are called hydraulic traits. These traits shape the short-term (seconds-days) evaporation and primary production of forest plots and scale to impact annual carbon sequestration. We used a 21-year dataset of annual stem growth increments in a forest plot in Northern Michigan to analyze the sensitivity of responses of individual species to water limitation. We find that annual or seasonal gross primary productivity (GPP) s poorly correlated with annual increment of stem diameter for almost all species. We show that annual stem growth is influenced by VPD and atmospheric water demand or light availability in some species, and by precipitation (or drought indices) in others. Groups of species with opposing hydraulic traits show opposing effect of soil moisture limitations. These indicate differences in species “perception” of water stress. We introduce FETCH4, a multispecies canopy‐level version of the tree hydrodynamic model, that simulates water transport through the soil, roots, and stem. The model results were able to capture emergent hydraulic traits, which characterize differences between species traits of drought sensitivity. Using FETCH4 in combination with available observations can provide unique insights about difficult-to-measure hydraulic traits and plant hydrodynamic behaviors.